sentance

UK monetary policy will need to be tightened more and at a faster pace than markets expect to bring inflation back to its target range, a member of the Bank of England’s monetary policy committee warned on Thursday.

Andrew Sentance, an external member of the MPC who has been urging modest rate rises since last summer, said that the medium-term view – generally presumed to be a two-year horizon – of his fellow MPC members revealed in the quarterly inflation report this week was “over optimistic”. Currently, the futures market for UK interest rates suggests that three rate rises are expected by this time next year, bringing the Bank rate to 1.25 per cent, from its current record low of 0.5 per cent. Read more

Britain’s economy has turned out better than expected a year ago, when rate cuts were being made and quantitative easing extended. This from Bank of England MPC member Andrew Sentance, who voted last month for a 25bp rise in the base rate.

Gently does it, argues Mr Sentance. In a speech in Reading today, he sets out the case for a gradual increase in the base rate. But he is not in favour of a rate ‘hike’: the word implies suddenness but the increase must be gradual. For the same reason, he’s not keen on the word ‘tightening’ to describe his suggestion: Mr Sentance wants to see a gradual removal of loose monetary policies, and it will take a long time before the base rate will be called ‘tight’.

There are four ways in which the outlook is brighter than expected a year ago, argues Mr Sentance. “The world economy has bounced back, demand is recovering in the UK, there is less spare capacity than we feared and inflation has been higher.” But monetary policy must be forward looking, so these factors alone do not add up to a “compelling case for change”. The question, he says, is how the growth and inflation outlooks have changed. Read more

Andrew Sentance hinted today that the UK central bank will tighten policy, saying that while current conditions persist, it “will be difficult for the MPC to keep inflation on target”.

“Through the recession, the MPC was right to relax monetary policy aggressively to provide support for a recovery that is now emerging. But as the recovery develops, the economic situation will change and the MPC must be ready to adapt its policies to the changing economic situation Read more

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Chris Giles has been the economics editor of the Financial Times since 2004. Based in London, he writes about international economic trends and the British economy. Before reporting economics for the Financial Times, he wrote editorials for the paper, reported for the BBC, worked as a regulator of the broadcasting industry and undertook research for the Institute for Fiscal Studies. RSS

Claire Jones is the FT's Eurozone economy correspondent, based in Frankfurt. Prior to this, she was an economics reporter in London. Before joining the Financial Times, she was the editor of the Central Banking journal. Claire studied philosophy and economics at the London School of Economics. RSS

Robin Harding is the FT's US economics editor, based in Washington. Prior to this, he was based in Tokyo, covering the Bank of Japan and Japan's technology sector, and in London as an economics leader writer. Robin studied economics at Cambridge and has a masters in economics from Hitotsubashi University, where he was a Monbusho scholar. Before joining the FT, Robin worked in asset management and banking. RSS

Sarah O’Connor is the FT’s economics correspondent in London. Before that, she was a Lex writer, covered the US economy from Washington and the Icelandic banking collapse from Reykjavik. Sarah studied Social and Political Sciences at Cambridge University and joined the FT in 2007. RSS

Ferdinando Giugliano is the FT's global economy news editor, based in London. Ferdinando holds a doctorate in economics from Oxford University, where he was also a lecturer, and has worked as a consultant for the Bank of Italy, the Economist Intelligence Unit and Oxera. He joined the FT in 2011 as a leader writer. RSS

Emily Cadman is an economics reporter at the FT, based in London. Prior to this, she worked as a data journalist and was head of interactive news at the Financial Times. She joined the FT in 2010, after working as a web editor at a variety of news organisations.
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Ralph Atkins, capital markets editor, has been writing for the Financial Times for more than 20 years following an economics degree from Cambridge. From 2004 to 2012, Ralph was Frankfurt bureau chief, watching the European Central Bank and eurozone economies. He has also worked in Bonn, Berlin, Jerusalem and Brussels. RSS

Ben McLannahan covers markets and economics for the FT from Tokyo, and before that he wrote Lex notes from London and Hong Kong. He studied English at Cambridge University and joined the FT in 2007, after stints at the Economist Group and Institutional Investor. RSS